Sustainability and ESG are increasingly relevant to responsible business. Danish companies are faced with expectations from customers, investors and consumers that they work with sustainable initiatives. These expectations also affect small and medium-sized enterprises (SMEs). ESG is a way for you to concretise and document your work with sustainable initiatives and thereby strengthen your business.
The concept of sustainability
What are the elements when it comes to sustainability? A popularly used definition of global sustainability comes from The 1987 Brundtland Commission Report, “Our Common Future”. The report sees the concept of sustainability as encompassing environmental, economic and social aspects. It proposes a definition of sustainable development as using the earth's resources in a way that balances utilisation and protection.
This avoids destroying our common livelihood. Sustainable development must therefore contribute to meeting the needs of the present while preserving the ability of future generations to fulfil their needs. The definition implies an approach to sustainability that includes social, environmental and economic aspects. This is the definition that we lean towards today on a societal level and which GSS is based on.
What is ESG?
GSS stands for Environmental Social GESG is about integrating sustainability into a company's business strategy. ESG is a trefoil that provides a way for you as a company to structure your work with sustainability. Let's dive into what each leaf of the clover consists of.
- (E)nvironmental (miljø) covers how companies deal with climate and environmental issues. This includes a focus on e.g. CO2 emissions, energy efficiency, pollution, resource consumption and waste management. This point implies that companies take responsibility for ensuring that business operations focus on nature and the health of the planet.
- (S)ocial (social relationships) covers factors such as labour conditions for your company's own workforce and how you manage your relationships with customers, suppliers and society at large. Keywords such as diversity, inclusion, labour conditions, human rights, health, safety and social responsibility fall under this dimension of ESG.
- (G)overnance (managerial matters) relates to corporate behaviour. This includes factors such as management culture, ethics and integrity, whistleblower protection, anti-corruption, transparency, accountability and compliance with laws and regulations.
The ESG trifecta frames the concept of sustainability and serves as a tool for how you as an SME can make your work with sustainability more concrete.
Voluntary reporting for SMEs
It is voluntary for you as an SME to decide if you want to make an ESG statement. It is up to each individual SME to assess whether ESG reporting provides business value. EU has developed a draft standard for SMEs that want to work with sustainability reporting. On Virksomhedsguiden.dk you can read more about what the voluntary standard contains. Here you can also find a template based on the voluntary standard.
Three good reasons why your company should actively work with ESG
There are many reasons why it makes sense for SMEs to work with ESG. We've summarised three of them here.
1. SStrengthening your organisation's competitiveness
Being able to provide data and information to customers and report on your sustainability performance can be crucial to your company's competitiveness. SMEs that work with sustainability initiatives that support customer needs are in a stronger position as a potential supplier to both existing and new customers.
Therefore, by working purposefully with sustainable initiatives in your company, you can secure better conditions when raising capital. In addition, ESG work positions your company and your products and services in the market.
2. Attracting and retaining labour
No business without labour. An effective ESG strategy can therefore be an important tool for you to both attract and retain labour. Active engagement with environmental issues is something that younger generations in particular have in mind when choosing a workplace. This is according to a study from 2024 conducted by Deloitte.
The study shows that Generation Z (people born between 1995 and 2005) and Millennials (people born between 1983 and 1994) are very concerned about climate change. The two generations see the protection of the environment as a societal challenge. Here they see companies as having a responsibility and great potential to drive positive change. This also means that 54 % of the Generation Zs surveyed and 48 % of Millennials surveyed, along with their colleagues, are putting pressure on their employer to act on climate change. If they can't help drive change in their organisation, many are ready to change jobs. Deloitte's study shows the importance of actively working with ESG to attract and retain the younger generation of workers in particular.
If your organisation focuses on the E of ESG, it can also strengthen the S by creating a sense of working for a greater purpose - independent of the bottom line. And that plays an important role in increasing employee motivation and job satisfaction.
3. Fulfilling the UN Sustainable Development Goals
Working with ESG is closely linked to The UN Sustainable Development Goals. The 17 SDGs are a universal call to action for businesses to address some of the world's most pressing challenges. They include climate change, economic growth, gender equality, and responsible consumption and production.
If your company actively works with ESG, you contribute to achieving some of the UN Sustainable Development Goals. On the The SDG portal you can read examples of how other SMEs have succeeded in their work with the SDGs.
Use time tracking as part of your ESG strategy
Although ESG reporting is voluntary for SMEs, it can be a valuable investment in your company's future. By taking the first steps now, you can position yourself more strongly in a market where sustainability is playing an ever-increasing role. If you want to realise the benefits of working with sustainability initiatives, such as strengthening competitiveness, ESG can be a tool to help you get there.
It is important to have insight and documentation of your business practices as part of your ESG work. Effective time tracking can play a key role in this. Recording working hours and work processes provides you with data that can help you create transparency, help you comply with working time regulations and promote a sustainable work culture. In this way, time tracking can support responsible business operations and contribute to your ESG strategy.
If you want to incorporate time tracking into your ESG strategy, you can design your own solution with Intempus. It's free and non-binding, and it can help you understand your needs.
Sources: Provice.com, Virksomhedsguiden.dk here, here and here, The SDG portal.com, Danish Industry, verdensmaalene.dk, Climaider, PWC, Attent, Danish Architecture Centre, Deloitte, The Brundtland Report, Danish Chamber of Commerce.
